Made in America

ByYNJune 11, 1985

THERE was a time not so long ago when the term ``Made in America'' stamped on a manufactured product gave it a special advantage in the global marketplace. Many US industrial products still hold their own. But it is also increasingly clear that US industry in general is being clobbered in world commerce and -- barring some tough decisions by Washington -- will continue to lose market share to products from other industrial nations. Has the United States become blas'e about the continued erosion in America's manufacturing sales abroad? If so, a hard look at the latest job statistics out of Washington should quickly dispel any casualness or indifference about what is happening to the US industrial sector. Looking at the Labor Department numbers released last week, 28,000 manufacturing jobs were lost during May. Since January alone, 163,000 jobs have been lost in manufacturing. And that's not all. The US has lost over 1.7 million jobs at the factory gates since late 1979.

Granted, the economy is still growing, although at a sluggish pace. The jobless rate held steady at 7.3 percent during May for the fourth consecutive month. And many new jobs were created -- some 345,000 of them that month. But most of the additional jobs were in the lower-paying service sector -- from electronics and construction to fast-food places.

The swing to a service economy is not necessarily bad. Such a transformation appears to be a characteristic of a technological society. And even within manufacturing, the restructuring is not necessarily negative. Many plants are finding that by using methods with better technology, productivity rises -- they can actually turn out more goods with fewer workers. Thus, to an extent the downsizing now taking place in manufacturing is what occurred within agriculture during the first few decades of this century, when strong gains in productivity offset -- and hastened -- a decline in farm employment.

Still, it would be difficult to view the increasing levels of joblessness within manufacturing as solely the result of gains in productivity. In most cases, the layoffs have occurred because of unique factors -- particularly the high value of the dollar vis-`a-vis other currencies, which is pricing US goods out of global markets.

Americans cannot afford to be complacent. From the time of the Yankee clippers down to the Space Age, the US has been a global trading nation. America's important international position has been in part linked to the importance of its global trade. And US manufacturing trade abroad has been one of the catalysts of the world economy.

There is yet another important reason for shoring up the manufacturing sector: Heavily unionized manufacturing jobs have tended to help lead the way for progressive wage gains and job benefits throughout the economy as a whole.

What, then, can be done to aid the industrial sector, which now constitutes only about 20 percent of nonfarm employment in the US?

Congress and the White House must complete action as quickly as possible on a budget-cut, deficit-reduction package to help ease pressure on interest rates and thus, it is hoped, put downward pressure on the dollar.

The administration should push ahead with a new round of trade talks aimed at lowering global import restrictions. If other nations are not willing to open up their markets to American products, then the US must be prepared to take appropriate countermeasures, including limited trade restrictions. Still, the objective should be to avoid global protectionism and foster a liberalizing of commerce.

Congress should take a particularly careful look at the administration's tax-reform plan as it pertains to manufacturing companies. Admittedly, there have been some abuses of depreciation and other corporate tax laws. But at the same time, many companies rely on such laws. Would ending or curbing current corporate tax laws injure manufacturers? And what would be the impact, if any, of a minimum corporate tax on the older manufacturing industries?

Finally, federal and state governments, along with private industry, should expand job retraining and relocation programs to aid workers and their families who cannot be expected to return to former high-paying manufacturing jobs.